Electronic Wonders reports net income of $95,000. The accounting records reveal Depreciation Expense of $50,000 as well as increases in Prepaid Rent, Accounts Payable, and Income Tax Payable of $40,000, $23,000, and $20,000, respectively. Prepare the operating activities section of Electronic Wonders' statement of cash flows using the indirect method.

As per the indirect method, Net Income is adjusted for the the non cash expenses and any increase or decrease in current assets and current liabilities. Increase in assets are subtracted whereas increase in liabilities are added and vice versa.

Cash flow from operating activities

Net income $95,000

Add: Depreciation $50,000

Less: Increase in prepaid rent $-40,000

Add: Increase in accounts payable $23,000

Add: Increase in Tax payable $20,000

Net Effect of operating activities on cash flow + $148,000

Hope that helps.